Dialog with an Uncertain Future / Excerp (Irregular updates)

The 51st Installment"The Basic Concept of Business is Repetitiveness"

by Yoshio Tozawa, Professor, Master's Program of Information Systems Architecture

The Basic Concept of Business is Repetitiveness

If people are asked, "What is business?" surprisingly, quite a large number of people say business is about making money. Certainly, going into the red put people in a bad condition, and it is more gratifying to make more profits than making less. But, is it really the truth? Why do so many people believe that business is about making money? In this article, I would like to discuss this aspect.

If you were asked, "What is your purpose in life?" would you answer that it was about making money? If you own a company, the purpose is probably to do business. Or, if you are a company employee, your answer could be making a contribution to the company's business. In those cases, what does "business" mean? Is it about making money?

If business is about making money, the purpose in life would be making money. If you are Japanese and hear that the purpose in life is about making money, many people would have a feeling of discomfort.

In the United States, there is a strong correlation between those who make money and those who are deemed to be socially successful. Those who make more money hold a more respected position than those who make less. The amount of money they make is used as a measure to judge people. Because of these factors, in the United States, it is generally accepted to say "the purpose in life is about making money," and this philosophy is rooted in the capitalism of America. Let's say you have $10 on hand. What is important is how to multiply the money, and those who can multiply the money into a larger amount will become a successful person. Those who multiply to $30 stand higher than those who multiply to $20. The amount of the increase is clarified in figures, making clear rankings in business. Those who could not multiply the money are considered failures. People can do anything to make money to the extent permitted by the rules (and the laws). It is often said that business is a game to compete in how much money to make. There is an underlying concept of values that the free competitive market works well in a free-market economy. However, after Lehman's fall, many people started to realize that this concept of values may damage society. In American-style capitalism, corporations are considered to belong to stockholders (investors) instead of management executives, employees, customers, and stakeholders. Because the goal of investment is to make more money, in some aspects, it is natural to think the purpose of corporations is to make more money to match the expectations of stockholders.

However, there are various discussions about the significance and purpose of corporations and not everyone necessarily thinks it is about making money. Many CEOs of American corporations have important managerial goals to exert an impact on society and want to be needed by society. They attach more weight to their relationships with communities than making more money. Although the idea of making money shows an introspective mindset that is for their own good and they care only about themselves, the idea of exerting an impact on society shows an outward and open mindset that is for the betterment of others and to serve for others.

Peter E. Drucker said, "A company's primary responsibility is to serve its customers. To understand the significance of corporations, it is essential to understand the goals of corporations. The goals can be found outside of each corporation. Corporations are the organizations of society, and the goals are in the society. There is only one definition of the goals. A business exists to create a customer. Corporations are not for benefits."

The assumption of business that it is about making money could be the result of naively accepting American-style capitalism, and it is not necessarily correct. In principle, business is built upon the relationship with society, and it becomes gainful as a result of the social contribution through corporate activities. Profits and money are only the outcome of business and cannot serve as a purpose. However, in order tosurvive in business, corporations cannot go into the red. It is inappropriate to solely aim at making profits and money as the purpose of business.

In order to survive in business, it is also important to keep steady customers. Corporations go out of business if they have no customers. To maintain and secure customers, it is essential to provide the same business to other customers. The significance of business is to provide the same goods and services in the same way to multiple and different customers and continuously provide the same quality of business for repeat customers. It is an intrinsically important factor in business to maintain and secure customers and continuously create new customers in the process of repeating the same. The basic concept of business is repetitiveness. I want to emphasize it because I don't think you would find too many people that would point it out.

The IT industry makes a great contribution when it comes to repeating things in an effective and efficient manner. Successful repetitiveness changes depending on how they utilize the IT infrastructure. Because the basic concept of business is repetitiveness, corporations that are good at repetitiveness have more competitive power. The manner of IT utilization contributes significantly to good or bad repetitiveness, meaning that IT has a high correlation with business competitiveness. IT plays a prominent role in the survival of corporations.

Instead of doing business continuously, and if there is no problem being a temporary corporation, repetitiveness is not as important. Temporary corporations can conduct activities with fewer ethical values with the objective of solely making money. There is a low possibility of receiving sanctions from society even if they are not socially responsible. If they are bad for society, there are some cases that those corporations cannot be tried in court because they are already gone by the time they come to the surface.

For healthy corporations, it is necessary to value repetitiveness in business and make efforts to survive as a corporation needed by society, instead of going after profits.